Thursday, October 6, 2011

Intellectual Ventures, the world's largest non-practicing entity (holding more than 35,000 patents and pending patent applications), announced the filing of a federal lawsuit (in the District of Delaware) against Motorola Mobility. It also published the complaint.

The press release and the complaint say that IV approached MMI to negotiate a license deal, but decided to sue because of MMI's continued refusal to take a license on unspecified terms that IV would consider "reasonable". According to the complaint, those discussions started in January 2011. IV asks the court for damages and an injunction.

While this looks like the umpteenth NPE lawsuit against an Android device maker, this is remarkable and adds to existing intellectual property concerns related to Android. Intellectual Ventures isn't just another NPE. Intellectual Ventures has received funding from Google itself, and is now suing Google's most expensive acquisition target ever for the infringement of patents, some of which are software patents that read on Google's Android, or at least on MMI's extensions running on top of Android. In other words, Google does not even protect Android device makers against NPEs it invests in.

In November 2010, Samsung and HTC already entered into license agreements with IV. While those also included some kind of "access" to IV's portfolio for "defensive" (i.e., retaliatory) purposes, I haven't yet seen Samsung or HTC use IV patents in litigation. I guess Apple and Microsoft have a license to all IV patents and therefore Samsung and HTC can't use those patents against Apple. Both also have license agreements in place with Microsoft by now (HTC even six months before it did the deal with IV, and Samsung since last month; Microsoft never sued them). Since they apparently didn't strengthen their positions vis-à-vis Apple and Microsoft, their deal with IV is primarily a license deal. In other words, Android device makers have to pay an IV tax -- even though Google is an investor in IV.

Case in point: the devices accused in the complaint include Motorola smartphones, all of which run on Android, such as the Atrix 4G, Electrify, and Photon 4G.

Let there be no doubt: Android is not free. Anyone who says Android is free doesn't know or simply lies.

Google's failure to protect its licensees against the very NPEs it finances is both inexcusable and irresponsible.

Intellectual Ventures isn't just one company. It operates like a group managing investment funds. A separate legal entity corresponds to each fund. Today's lawsuit is brought by Intellectual Ventures I LLC and Intellectual Ventures II LLC -- two of various funds created by Intellectual Ventures.

It seems that Google invested only in the "Invention Investment Fund I" and didn't pour money into IV's other funds. That particular fund is not involved with today's lawsuit. That's an important fact, but it doesn't change anything about the following fact: by giving money to IV, Google contributed financially to the development of the world's largest NPE and served as a reference investor that enabled IV to raise funds from others. Therefore, Google played a key role in turning IV into what it is, and it should never give money to any NPE -- or any company setting up patent funds -- without taking care of the Android ecosystem at large.

On AndroidForums.com, a user talked about Google's financial commitment to IV and some of its other patent-related dealings. The post starts with this sentence: "The hypocrisy is unbelievable".

U.S. Patent No. 7,120,462 on a "portable computing, communication and entertainment device with central processor carried in a detachable handset"

To the extent that I have looked at the four software patents, I strongly suspect that the infringement allegations relate to Android itself, not to Motorola Mobility's "MotoBlur" or other extensions.

In its complaint, IV states that "more than 3,000 of [its 35,000] patents and patent applications are the result of Intellectual Ventures' own invention efforts, both in-house and with Intellectual Ventures' inventor network". However, it seems that none of the ones asserted against MMI resulted from IV's own "invention efforts". Five of them changed hands at least twice before finally being acquired by IV; the sixth one (of which IV is an exclusive licensee) was filed for before IV was founded.

If Google consummates the proposed acquisition of MMI, it will do so long before IV's lawsuit is decided. The District of Delaware is not a rocket docket. If IV prevails then, or if a settlement happens only after the acquisition, IV might require Google to pay royalties on those patents for all copies of Android that it distributes and has others distribute -- not only MMI's devices.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.